Oil prices started the week with sharp rises, but they are currently traded with moderate changes. The IEA-OPEC feud was the main talk of the day and there are still speculations around it; today, the major reports to be published include: European GDP, ISM Non-Manufacturing report, German factory orders and Australian employment report.
Here’s a short analysis and outlook of the oil market for today, July 6th:
Oil price – July 2011
Yesterday July 5th oil price(WTI) rose by 2.05% to $96.89 per barrel; during July the WTI price rose by 1.5%.
Brent price also inclined by 1.93% to $113.53 per barrel.
Premium of Brent over WTI
The premium of Brent over WTI started off July with a moderate rise as it reached on Wednesday July 5th $16.64/b;.
Following the spike in the premium of Brent over WTI on June 13th in which it reached $23.29/b, this premium declined; it is still fluctuating, but in recent days it settled around the $16-$17 mark.
OPEC and IEA – update
Following the announcement of IEA in which it will release 60 million barrels of crude oil from its emergency reserves, there was news of a feud between OPEC and IEA; OPEC criticised IEA for making this move as the reserves are suppose to be used for emergency and the current situation in the crude oil market doesn’t constitute an emergency. There were even those who speculated that this move by the IEA will cause OPEC countries including Saudi Arabia to reduce their crude oil production.
In the recent OPEC-IEA meeting in Vienna, Austria on June 27th, the two organisations stated they will bury the hatchet and this oil release won’t affect OPEC’s production and it will continue to fill the gap of Libya’s oil production.
In recent news, Saudi Arabia ordered additional rigs to keep its crude oil production which is set to nine million bbl/d. This might indicate that Saudi Arabia will maintain a high crude oil production, but it’s still too early to determine if the total oil production of OPEC won’t decline due to the recent oil release of IEA.
Oil price Outlook:
There will continue to be speculations around OPEC’s oil production following the release of the oil reserves by the IEA. The US dollar will continue to affect the oil prices and if USD will start to appreciate against major currencies this could cause crude oil prices to trade down. These two opposing direction are likely to pull oil prices in different directions.
For further reading:
Here is a reminder of the top events and reports that are planed for today (all times GMT):
10:00 – Final GDP of Q1 of European Union
11:00 – German Factory Orders
15:00 – ISM Non-Manufacturing PMI
2:30 – Australian employment report